Federal Direct Stafford Loans


To be eligible for a Federal Direct Subsidized or Unsubsidized Stafford Loan, you must meet the following criteria:

  • You must be enrolled at least half-time.
  • You must file the FAFSA (Free Application for Federal Student Aid) every year that you are enrolled in school. Most students who apply will qualify for a subsidized or unsubsidized Stafford loan.

How to apply

The Stafford loan application is a three-step process. If you do not complete all three steps, your loan will not be processed.

  1. Accept the loan in your financial aid portal at student.msu.edu.
  2. Complete the Stafford Loan Entrance Counseling process at the StudentAid.gov website.
  3. Sign your Stafford Loan Master Promissory Note (MPN) at the StudentAid.gov website. The Stafford MPN is good for ten years provided at least one Stafford Loan is disbursed to you within the first 12 months after signing.

Differences between subsidized and unsubsidized loans


The federal government pays the interest on a subsidized loan while the student is in school at least half-time. After the student drops below half-time or leaves school, interest will begin to accrue. Students should contact their federal loan servicer for more information.


Interest does accrue on an unsubsidized loan while you are in school. You may choose to pay interest while in school in order to avoid "paying interest on interest" (capitalizing interest).

Interest rates

The Direct Loan interest rate varies annually with a maximum rate of 8.25% for undergraduates and 9.5% for graduate students. The interest rate for undergraduate Subsidized or Unsubsidized Direct Loans disbursed on or after July 1, 2022 is 4.99%. The interest rate for graduate Unsubsidized Direct Loans disbursed on or after July 1, 2022 is 6.54%.

Loan fees

Federal Direct Loans disbursed on or after October 1, 2020 require a 1.057% origination fee which is paid at the time of disbursement. Thus, 98.943% of the gross loan amount will be disbursed to your student account.

Repayment and consolidation

When you near graduation (or drop below half-time), you will be given information on loan repayment and consolidation. This is referred to as exit counseling (or "the exit interview"). For more information, see our page on loan repayment.